PRESS RELEASE

For Immediate Release: Contact:

May 25, 2011 Jenny Loeb: 845-562-2020 office

845-857-8415 cell

Newburgh, N.Y. Headed Towards Bankruptcy, Residents Take Over their City Hall Demanding Intervention from the State

Community Members March in Protest of a 71% Property Tax Increase

A day after the New York State Assembly unveiled their proposal for a state tax cap, residents of Newburgh, N.Y. protested massive local tax increases while demanding state aid and intervention. After a march, organized by the group Community Voices Heard, residents stormed into Newburgh’s City Hall, claiming their City government is incapable of getting them out of a dire financial crisis and demanding New York State step in to take over. The protesters, consisting of low-income residents, homeowners, business owners, and union members, say the City cannot survive massive tax increases and a declining tax base on its own.

The City of Newburgh raised its property taxes by a staggering 71% this year, and are and predicting at least a 300% total increase between 2010and 2013. Residents say tax increases are not only unfair, but unsustainable. Property assessments are dropping, and more homes are going into tax foreclosure proceedings.

“The City’s only plan for balancing the budget is raising taxes? If people don’t pay their taxes or move out, will they just keep raising them? This will be a ghost town. It doesn’t make sense - at one point the whole system will collapse,” said Loretta Manning, member will Community Voices Heard.

Protesters say they while do want their local property taxes capped, the current tax cap proposal would only make state intervention more necessary. If a 2% tax cap were to pass, Newburgh likely would not be able to make payroll or maintain basic services without

--more--

increased state aid. “Governor Cuomo and our State officials would be hypocrites not to step into Newburgh. They want a 2% property tax cap – how can they let Newburgh raise taxes by 71%? We need help even now, with our high tax increases…if the tax cap passes we’re going to need a lot more help,” said Brenda McPhail, leader with Community Voices Heard.

In addition to the tax increases this year, the City cut services by 20% and had to borrow $12 million in emergency bonds from New York State last year to make payroll. They say the State should want to intervene, because if the City goes bankrupt it will negatively affect the entire region and State.

Community Voices Heard, who organized the march, is a membership organization of low-income individuals that is usually advocating for housing, jobs programs, and social services, not lower property taxes. “We took this issue on because we realize our City is dying,” said Loretta Manning of Community Voices Heard. “We’re already on life support, and soon we’ll be at a flat line. There is no way out of the current financial situation. We may not pay property taxes ourselves, but our landlords can’t pay it either so they are raising the rent. Our area of the City already has 1 out of 4 buildings vacant, now there will be even more. And if this City goes bankrupt it won’t be good for anyone.”

When they arrived at City Hall the demonstrators entered and marched to the second floor, where City Manager Rick Herbek’s office is. He eventually came out of his office, and addressed the group’s demands, which included that he push for the state to make a stronger intervention. He claimed the City asked the State for a Financial Control Board, and that they were denied.

Those involved with the march are pushing for State receivership, which has never been done in New York State, but has been successful in several Massachusetts cities, and tried in other states around the country. In such a scenario, the State would appoint a receiver to take over the duties of City leadership. This could include: fundamentally restructuring its administrative and financial operations, reforming its land use and zoning system to promote economic growth and diversify its tax base, and adopting a new Charter to ensure a more effective and representative form of local governance. The groups are also calling for state aid that does not bring the City further into debt, like the bonds issued by the state last year.

Community Voices Heard says that one way to fund property tax relief and increased state aid is to extend the personal income tax surcharge, commonly known as the millionaire’s tax, and institute other progressive taxes. “Not all taxes are the same,” said McPhail of CVH. “We have people here who are struggling and about to lose their homes. They can’t afford to pay the property taxes. Meanwhile the Governor and Senate want to cut taxes on the wealthiest 3% of New Yorkers. They can afford it. A small increase in taxes for the wealthy

--more—

or for Wall Street could literally save our City and many others.”

The effort for state intervention has brought together a broad coalition of residents and unlikely allies – middle-class homeowners, low-income and unemployed renters, business owners, local unions, and even some City officials. The newly formed Change Newburgh PAC released a video “Letter to Albany” early this week, and have put up hundreds of lawn signs calling on Albany to step in to Newburgh. Newburgh City Council member Marge Bell

attended the march and press conference and supports the push for state intervention, even though she knows it will strip some power from current City officials. “I’ve been trying through 3 ½ years in office to affect some positive change for our entire City,” she said today, “but have been continuously frustrated by the lack of oversight and accountability. I would not even be unhappy to lose total power as a City Council member, because something absolutely has to be done. People are losing what they worked for their entire lives. Unless the State comes in, I don’t think we have a shot. “

Residents all agree that finances have been mismanaged for years, and see no way the City leadership can bring the City back to solvency. Several years of budgets were passed by underestimating expenditures and overestimating revenues. The City spent down its general fund, leaving it unable to make payroll last year.

There are plenty of factors that led to Newburgh’s current financial situation – one of them is a high turnover in City leadership. There have been 7 City Managers in Newburgh in the last 10 years. But residents say that regardless of the leadership, Newburgh’s problems will persist. “I believe we'repast thepoint whereNewburgh can lift itself up by its own bootstraps,” said Robert Ingram, representative of Change Newburgh. “A mere change in leadershipis not the answer as the problems weface are beyond the ability of the city council to control. We could elect the five wisest people in the history of the world and they still wouldn’t be able to solve these problemswithout outside help.”

Based on conditions in the 2010 Newburgh Fiscal Recover Act, in which the State Legislature issued $12 million in emergency bonds to the City, the City is required to submit quarterly budget reports to the State Comptroller. However, according to the Comptroller’s Office, they have no power to approve or disapprove Newburgh’s budgets, and can make recommendations but have no authority to ensure these recommendations are followed. The most recent report from the City includes the following statement from Acting City Manager Rick Herbek, the author of the report: “The city’s major increases in its tax levy over several years can only contribute to an ongoing downward spiral in its community and financial stability from which the City may never be able to recover.”

###